Obamacare and Your Taxes This Year

Attention tax filers! Were you unfortunate enough to have to get health insurance through the Marketplace in 2016? While doing my friend’s taxes, I came across a new splinter starting with the 2016 tax year, courtesy of Obamacare. If you receive a 1095-A statement for your insurance and there are amounts in column C ‘Monthly advance payment of premium tax credit’, depending on your income, you might have to PAY those amounts back. Here’s how it works:

In column A is the monthly premium for the plan you received, in column B is the value of the second lowest cost ‘silver’ plan. Column C is what the government paid to the insurance provider towards your premiums on your behalf (a mini-subsidy if you will). Depending on your income and where you fall along the federal poverty line, this column C amount will result in either a credit that you can take on your return, or a charge that you have to pay back on your return. You really won’t know where you stand on this until you file your taxes for the year. Case in point – one of my loved ones, who works at a restaurant and goes to college, normally breaks even on her return, but this year had to pay more than $600 because of this. $600 that she did not have nor did she (or I) have any inkling she might have to pay. She lives paycheck to paycheck and is trying to get a college degree and pay the rent, but she earned too much, apparently.

What really angers me about this is that all the documentation surrounding it works really hard to NOT reference that you might have to pay. It is only ever referred to as the Premium Tax Credit, as you can see even on the tax form, and explanations are heavy on the credit portion and incredibly thin on the payment portion. This was carefully crafted to lure people into thinking they could save money on their health insurance and then – Wham! Hello, here’s your tax bill.

For anyone you know that had to sign up for Obamacare coverage, please tell them about this in case they have to pay. This is one of the many sneaky costs they don’t talk about, but has very real impacts and there are more coming. Obamacare COSTS are being phased in, probably in the hopes that if they trickle them in over time, we will be less likely to notice them. This was done by design. Many people use their refunds to pay off debts or just get caught up in life, and to have a debt come due that you didn’t even realize you signed up for is damaging and disheartening, and incredibly unethical. We should not be conditioned to expect this from our government – they’re supposed to be working for us, not against us.